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Exit the Eu to Boost Uk’s Car Industry, Says Study

EU withdrawal will not damage the automotive industry but help it, according to a new study.

The car industry would benefit from an EU exit because an independent UK ‘could well attract more rather than less investment from global car groups’ in fast-growing Russian and Chinese markets, argue Ian Milne, think tank Global Britain’s Director, and Natalie Hamill, EU project Director at Westminster think tank Civitas (p.4). In 2010, ‘UK exports of cars outside the EU were already worth more – £9.5 billion – than UK Exports to EU-26 – £7.8 billion’ (p.4).

Free trade with EU probable

European countries are also very likely to cut a ‘mutually advantageous’ free trade deal with Britain, especially given their economic woes. The EU supplies 84 per cent of the cars the British buy, but absorbs under 60 per cent of those Britain builds, so it has a strong financial incentive to keep trade open.

Key player Germany had a €108 billion surplus with the UK from 2007-2011, and in 2011 German firms exported 474,000 more cars to the UK than German consumers bought from Britain. Flagship German firms BMW and Volkswagen would have especially compelling reasons to lobby their government for free trade. Not only would their exports to Britain face 10 per cent duties without it, but so too would BMW’s sales of Oxford-built Minis shipped to the EU.

Investors favour UK regardless of Single Market

Western European car sales declined for 12 consecutive months up to September 2012, yet Britain saw an 8.2 per cent increase. Despite the UK’s much-publicised uncertain future regarding the Single Market, confidence is high. The industry saw over £4 billion of investment in 2011, plus British expansion plans from Jaguar Land Rover, General Motors, Toyota and Honda.

However, a declining Europe is not what is driving the success of the UK industry, which employs over 700,000 people and accounts for over 10 per cent of UK exports. The authors show British ‘industry expertise is world renowned’ (p.3) so attracts global automotive business through its R&D potential, technical prestige and motoring heritage, which outweigh any customs union benefits.

Nationwide benefit to leaving EU

As the UK ‘imports cheap cars and exports expensive cars’, freedom from ‘the burden of Single Market regulation’ would afford the UK consumer ‘cheaper motoring while the UK-based manufacturers enjoy high margins’ (p.4). With the EU stagnating and emerging markets growing fast, ‘it is not hard to see which markets the UK needs to prioritise’ (p.2).


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